Sensex hits record high, Nifty tops 21,900 for first time as Q3 IT earnings bring cheer

IT stocks clenched the top spots of the gainers list on the Nifty 50.

The benchmark Nifty extended its early gains and scaled a record high, topping the 21,900-mark for the first time as of afternoon trade on January 12, while the Sensex also cemented a new peak of 72720.96.

The strong run was driven by information technology stocks which soared after two industry majors — Tata Consultancy Services and Infosys — released their December quarter results that rekindled hopes of improved earnings in the coming quarters amid strong new deal wins.

Both companies posted decent numbers in a seasonally weak quarter, however, it was their strong new deals that sparked optimism across the Street of the deal wins turning into revenue in the coming quarters.

Expectations of interest rate cuts also continued to fuel hopes of an easing macro environment for the sector, which is expected to further support its recovery from the earnings downgrade cycle.

"Infosys overall Q3 numbers are broadly in line with expectations, TCV wins of $3.2 billion, is a positive surprise, despite cancellation of one big deal. We view Infosys Q3 earning as stable in a seasonally weak quarter and shift our focus to earnings improvement in FY25/26, as headwinds bottoming out for the sector," said Sanjeev Hota, head of research at ShareKhan by BNP Paribas.

At 2.37 pm, the Sensex was up 908.61 points or 1.27 percent at 72,629.79, and the Nifty was up 263.00 points or 1.21 percent at 21,910.20. Market breadth also titled in favour of gainers as about 1,881 shares rose, 1,371 fell, while 66 were unchanged.

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Information technology stocks contributed nearly 165 points to the Nifty total gains as they soared 4-8 percent. Infosys has the fourth largest weightage in the Nifty 50 at 5.8 percent while TCS is the sixth largest at 4.05 percent. Hence, stellar gains in these two counters alone lifted the Nifty 50 around 0.6 percent.

Likewise, the Nifty IT index also zoomed 5.15 percent to 36525.60 points. Shares of Infosys, which soared nearly 8 percent have a weightage of around 27 percent in the Nifty IT index while TCS, which jumped around 4 percent takes up 25 percent weightage.

"On the technical standpoint, the 21,580-21,570 zone is likely to cushion any near-term blip for Nifty 50 while the sacrosanct support lies around 21,500," said Sameet Chavan, head research – technical and derivatives at Angel One. On the higher end, Chavan sees the 21,850 as a crucial hurdle and believes that only a decisive break through that mark can trigger a fresh round of rally in the market.

On the sectoral front, most sectors traded with gains except automobiles and pharma. Profit booking seeped into automobile stocks after their strong run in the past sessions, bringing the Nifty Auto index down nearly a percent.

Among others, banks, infra, PSU banks, metals, realty, and oil and gas inched higher. The broader market also witnessed strong buying as the Nifty Smallcap 100 rose 0.7 percent while Nifty Midcap 100 was up 0.4 percent.

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